We need more infrastructure for every pound we spend; cost is King

Miles Ashley
13 April 2015

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We should have low expectations of transactional arrangements to deliver complex infrastructure, and low opinion of those that promote them, says Miles Ashley.

Sit at any round table, on any industry day, and there is passionate agreement.   We know that we need to work differently, we know we can, and that when we do we’re sure we will get very much better outcomes for UK Infrastructure.  

Heads nod as we discuss the need for collaborative behaviours, investment in capability and training young entrants, building offsite, aligning rewards with client outcomes, integrated design, carbon efficiency, engaged workforces and innovative technology.  One wonders why we just don't get on with it.

"We should have low expectations of transactional arrangements to deliver complex infrastructure, and we should develop a low opinion of those that continue to promote them.  We will find a new model, because we must."

Whilst there are great examples of great teams achieving these aspirations, our introspection continues and such exemplars remain exceptional.   

In the majority of cases we continue to procure by project.  A clear price for a fixed scope and service, enshrined in a compliant bid.  It feels safe to do so, it fits the governance and expectations.

But history is clear, it fails to incentivise the market to innovate and it fails to engage that market in the value of outcomes.  Such short term transactions (often shorter than say, an apprenticeship term) fail to incentivise investment in skills, or indeed anything else.   

If the supply chain can effectively only compete on price, then it will, and if such transactional behaviour is intended to drive certainty then witness the increase in contract costs to outturn, for often broadly similar operational outcomes.

Low prices are an illusion, and they destroy focus on value.  If we want better value from our infrastructure, more operational performance per pound, we need to ask the market a more sophisticated question.

“If we want better value from our infrastructure, more operational performance per pound, we need a more sophisticated question.”

We have witnessed the piloted components of a new configuration, but its painful.  Long term relationships driving value demand clients who will move away from the comforting norm of transactional arrangements and engage and reward the market on operational solutions. For tier 1 suppliers to prosper they will need to provide real long term value for operators and change their own commercial model. 

Integrated design will necessitate a different quality of engagement from both the supply chain, and the design community. Other industries have already faced such pain and prospered, and such change always requires a fearless response to intransigence.

When we do see these new configurations develop, and there are examples in Water, Highways and Rail amongst others, they are self evidently a better way of working where people, freed from surviving an intransigent commercial position are refocussed on driving client value- (sometimes 30% better value).  It is also a great place to work as motivated people simply do what we all went into this industry to do; produce great infrastructure.  What a prospect. 

We should have low expectations of transactional arrangements to deliver complex infrastructure, and we should develop a low opinion of those that continue to promote them.  We will find a new model, because we must.

Cost is still king, but as we all now know, its a case of emperor’s clothes.

Miles Ashley is director of Crossrail & stations programme at London Underground